The story of our financing - ESBRI Sweden-US


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My talk at ESBRI Sweden-US forum.

John Sjölander is the COO of Burt, Creating tools for Creative Agencies to make better ads.

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  • \n
  • My name is John Sjölander, and I'm a geek.\nYes, I mean as in computer-nerd. \nBut I also love people and creating things.\nThis, as I feel it, eventually and inevitably turned me onto the startup path.\n
  • I was the founding CTO of Burt, and has since then transitioned into COO. So, these days I make sure everyone does what they’re supposed to, not only the Tech team. Burt is headquartered in Göteborg and has 27 employees.\n
  • Long story short – we’re in advertising.\n
  • Having been born out of an creative advertising agency, as opposed to a technology company, we’re often perceived as having a different approach to the problem we’re solving.\n
  • Commonly AdTech companies tend to lean heavily on the word “Technology”.\n
  • And perhaps that’s the reason that something that used to be this simple, when the first Banner campaign ran 18 years ago, in 1993.....\n
  • ... has today turned into this. It’s overly complex. We’ve been trying to solve the problem of online advertising with Technology for 18 years. Every time bringing a new layer of complexity to the transaction.\n
  • But online advertising isn’t broken because of technology. It’s broken because it’s a lousy user experience. \n
  • Mind you, people do enjoy ads. If I ask my girlfriend if she’d like Vogue without the ads she’s claim “No thank you, the ads are part of the magazine experience, I like the ads.” \nBy providing better information about what works and why, our hope is to provide a better experience, bettering the online real estate and improving the media buy.\n
  • So recently we raised money for our company. In doing this we met extensively with both US and EU investors. Very quickly i’d like to address what we learned.\n
  • For a well positioned startup US investors are accessible. I just want to clear away that question (because we’ve had it several times).\n
  • US angels and VCs are more professional. Firstly, at an early stage they don’t expect projections, but spend time getting to know the team figuring out if and why this team would win it. \nLess of “Is it any money in this?”, and more of “Why will you win this market?”\n
  • For your company however, choosing to go US should rather be a strategic decision. Unless the US is your early market, and I’m betting it isn’t (or doesn’t have to be), there is no MUST in going for US angels. Unless the US market is part of you king pin strategy, it’s probably more of a hassle. For a good company there are money available in Sweden for less effort, and often for at better terms.\n
  • If you choose to go US – Product matters A LOT. US companies are usually better at packaging their product and value proposition – because they’re on the front lines, have better access to the tech thought leaders, have tougher competition and are often helping define the space.\n... So you have to be better at packaging too. Because if you raise US money those companies are your competition for that money.\n
  • So... basically – US soil. US rules. Terms and valuations at seed level differ. And since US investors have access to good opportunities with terms and company structures they’re used to – expect to play by those rules. That spells Delaware companies and Lawyer fees.\n
  • For many reasons, US angels (in NYC and SF) have access to greater deals. Access to talent, a huge market, a more mature eco-system, population density etc, they’re at an advantage. Because of this – US angels seem less prone to be flexible and move outside of their comfort zone (read invest in a Swedish AB, or even an English Ltd.).\n
  • The theme: what are new and innovative forms of early stage seed capital – trends and examples\n
  • Firstly - There are PLENTY!\n
  • Started by Paul Graham. A startup accelerator that put in a little money, help companies quickly build product and gain traction, and then expose them to investors. 3-6 months. Average YC companies are valued at an increadible $22.5M.\n
  • Basically a traveling YC. Investing all over the US at seed stage. Founded by Brad Feld out of Foundry Group. Brad is a complete star who has written books and guides aimed at entrepreneurs that push the balance of power from the VCs to the entrepreneurs – quite courageously.\n
  • Networks of angels, often lead by super-successful angels. An interesting trend where their power bridges the gap between angels and VCs. Can move very quickly. Often claimed by VCs for stealing away the deals from them, and inflating valuations down the line.\n
  • 500startups – started by a cracy guy called Dave McClure, the idea is for one fund to invest in 500 startups, providing them with an office space in Palo Alto to build a great community.\n
  • Lean Startup movement – Eric Reis, a blog, a book, a movement. How to apply (Toyota) Lean principes to startups.\n
  • The process which inspired the Lean Startup movement. Created by Steve Blank. A process to move out of your office and out to meet customers, to really understand their needs, and to create products that solve their actual problems.\n
  • A mailing list with angels where companies get very easy access to angels and possibilites to pitch to many angels very quickly. Also a community that helps both angels and entrepreneurs.\n
  • Introduced to minimize lawyer costs and hassle with setting up terms and company structures for early stage, something that can be both costly and time consuming. \n
  • So many blogs: Fred Wilson, Fred Destin, Brad Feld, Paul Graham, Mark Suster, etc. etc.\n
  • The very early traction with Twitter was with Valley entrepreneurs and investors.\n
  • Even more blogs!!!\n
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  • And they're all in the US!\nWith the exception of EU based SeedCamp (Index Ventures ... which the US VCs (USV, Atlas, Accel, First Round) are shortcutting to their advantage, getting the best deals early.\n\n
  • In my experience, the majority of EU, and even more so Swedish, VCs are laggards when it comes to rethinking the VC business. Case in point – Not one single Swedish VC with a blog with a significant public following. There is a HUGE opportunity for a Nordic VC that decides to become a market leader for the community.\n\nAnd perhaps, seizing that opportunity, building that community, is a new dawn for investors.\n
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  • The story of our financing - ESBRI Sweden-US

    1. 1. John Sjölander, COO @jsjo
    2. 2. Technology.
    3. 3. Ad Webserver server
    4. 4. Attainable.
    5. 5. Attainable. Mindset.
    6. 6. Attainable. Mindset. Strategy.
    7. 7. Attainable. Mindset. Strategy. Product.
    8. 8. Attainable. Mindset. Strategy. Product. Rules.
    9. 9. Attainable. Mindset. Strategy. Product. Rules.Dealflow.
    10. 10. Y-combinator.
    11. 11. TechStars.
    12. 12. Super angels.
    13. 13. 500 startups.
    14. 14. Lean movement.
    15. 15. Customer development.
    16. 16. Angel list.
    17. 17. Boiler plate agreements.
    18. 18. Blogs.
    19. 19. Twitter.
    20. 20. Blogs!
    21. 21. Community.
    22. 22. Community.
    23. 23. Community.
    24. 24. Thank you!